Do banks expand the marketamp;#39;s money supply with the deposits on loans only or with regular deposits as well? -

Deposit on loans, that is, money I have borrowed and deposited in my bank account. Regular deposit, that is, money that I have earned through my salary for instance and deposited in my bank account.|::::|In short yes with both. When you deposit money in a bank it will increase the money supply because the bank will keep only the require reserve and loan out the rest whether it s from your salary or a loan from another bank. It s known as the fractional reserve banking system.|::::|The only way a nation s money supply can be expanded is through the Central Bank and the amount of debt that is being held by it. In the ways you re explaining, a commercial bank cannot affect the money supply.|::::|They are not supposed to use regular deposits for this purpose, but what actually happens depends on the bank.